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Governance prescriptions under trial: On the interplay between the logics of resistance and compliance in audit committees

Marie-Soleil Tremblay and Yves Gendron

CRITICAL PERSPECTIVES ON ACCOUNTING, 2011, vol. 22, issue 3, 259-272

Abstract: This paper examines linkages between discourse and social change, in the context of corporate governance in times of turbulence. Specifically, we study how regulatory prescriptions and best-practice discourse promoting a strengthening of audit committees’ work, in the aftermath of the 2001–2002 financial scandals, were received by audit committee members. Is reception characterized with a logic of compliance and/or one of resistance? Conceptually, our study is informed by the notion of trials of strength, in that prescriptions are submitted to a series of loosely connected and quite informal tests taking place within the audit committee community. Our investigative task is predicated on in-depth interviews with audit committee members of Canadian public companies. The analysis indicates that the interviews are mainly reflective of a logic of resistance, which is especially sustained through interpretive strategies ultimately attributing the collapses of Enron and Arthur Andersen to atypical and unrepresentative actors. Prescriptions calling for a strengthening of the audit committee's role are deemed irrelevant in this context; mandatory changes tend to be superficially implemented and do not translate into a significant shift in committee members’ ways of thinking and doing. However, our interviews point to one specific area where substantive change developed, that is to say committee members’ views regarding the association between audit fees and audit quality. As such, our paper consolidates literature on trials of strength in bringing further light on their complexities – specifically in showing that trials can be tentacular (being loosely related to one another), paradoxical (generating resistance and compliance simultaneously), and secretive (taking place behind closed doors). Implications in terms of democratic governance are discussed.

Keywords: Audit committee; Corporate governance; Logic of compliance; Logic of resistance; Regulation; Trials of strength (search for similar items in EconPapers)
Date: 2011
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